Students Are To Blame For The Unsustainable College Debt Bubble

Just My Opinion | 01-24-20 | Gil Martello III

[NohSpinZone]

I’m a huge Dave Ramsey fan. He has said what you just wrote - almost verbatim. 100% agreed.

[Reily]

Parents share some blame too.
I don’t see them mentioned.

[mr_hammer]

I believe you are over thinking the my rant.

Simply, you cannot penalize the taxpayer (i.e. fee college) to pursue a career that will not make a return on the investment made.

Ted and Alice made multiple bad decisions, as do our young people getting degrees in fields that cannot support the debt structure incurred.

Selecting a career and going to college is a business decision...in a lot of case it become and emotional decision by entitled teenagers.

[Reily]

I told mine STEM or business no “hobby” degrees (which I defined as liberal arts, etc.) If you insist on a liberal art, etc. you must dual major with a STEM or business degree. I caught a lot of flack for my unreasonableness from my parents, in-laws, other kid’s parents. I stuck to my guns & it worked out well. All have advanced tech degrees now. Some of my critics have even acknowledged I was right.

[Zathras]

Actually I blame the public school system and parents.
Even when I was in my 20’s, I had no idea how much it cost to fund a family and home.
The world doesn’t need anymore college grads with worthless degrees and parents need to tell there children this early in life.

Unlike much of the world, we do a very poor job getting our children ready for the real world.

[Robert DeLong]

Well they are one part of the equation. The government is the other part. The students would not be able to borrow in the first place if there was no one supplying the easily obtained money. The banks saw the handwriting on the wall, which is why they all got out of the practice. This easy money is also the major contributing factor to the ridiculous high cost of higher education. It is also the cause of dumb majors being created that offer little to no return for the “education” secured.

[Political Junkie Too]

First, I didn't realize you were the author; I thought you just posted it. Kudos for writing it.

I came it this from a style perspective. I thought you were setting up the reader metaphorically by first telling the story of the buggy whip, where the point was that it was a high-quality buggy whip manufacturer that made a product nobody wanted. The natural transfer of concept to college would have been that universities are also putting out a product that there is no demand for (which I believe is true, but not like the total market collapse of outdated technologies).

To your point that "a career that will not make a return on the investment made," I believe it's a three-fold issue.

1. The job market isn't paying the salaries.
2. The students aren't pursuing the marketable degrees.
3. The universities are cranking out graduates without regard to whether the job market is there for the graduates. In other words, they are graduating buggy whips.

The causes for #1 are also two-fold:

1. The jobs are being off-shored to lower-cost geographies.
2. The cheaper workers are being imported via H-1B visas and are displacing our graduates.

The causes for #2 are two-fold:

1. The students are choosing social-justice degrees with no anchoring in reality.
2. The K-12 schools are socially promoting students who either aren't ready for college or are better suited to trade studies.

The cause for #3 is two-fold:

1. The students have been socially indoctrinated to believe the only way to succeed is with a college degree, so everyone must now go to college.
2. The change to government-sponsored student loans has made it easy for universities to pad their enrollments in order to get the funding to sustain their tenures and research programs.

I understand your point that Ted and Alice (and Bob and Carol) made a series of bad decisions, and the students are also making a series of bad decisions, but I believe that leaving the analysis there is over-simplifying (you said I was over-thinking). In decision analysis, there is the concept of "good decision, bad outcome," and "bad decision, good outcome."

In the case of getting into the buggy whip business, I think we'd all agree that it was a case of bad decisions with bad outcomes. I don't think the college degree analogy is necessarily the same.

As I pointed out in my first post, if there is a market balance between supply and demand then the price paid will equal the cost plus profit. If the universities were balancing the supply of graduates with the demand for graduates, this would mean that the graduates were being paid a salary that allowed them to pay off their loans plus their living expenses.

The fact is that the university degree market is completely unbalanced and out of whack. Young students may be making good decisions to pursue a degree, but many are too uninformed at that age to understand that the universities are glutting the market right now. Just like with Ted and Alice, the universities have built up a capital investment in professors and manufactured an inventory of graduates that can't be sold.

The university result will eventually be the same: their inventory of unsold graduates will lose their value (in terms of alumni donations, university brand reputation, etc.), and the university might eventually go out of business if they can't get new student enrollments because the word is out that their graduates are unemployable.

Is all of this the fault of the student loan scam? Is it the result of students making bad career decisions? Is it the fault of businesses that are looking for cheaper workers or exporting jobs? Is it the fault of universities hungry for students flush with loan cash that they keep taking them in regardless of the ability of the job market to absorb the graduates?

But in any case, this is what I took away from the metaphorical parallel that you set up in your rant.

-PJ

[EEGator]

Your daughter is multiple sigma to the right of a Gaussian distribution. You should be proud, and I’m sure you are.
She is not a good example of the vast majority of society.

[kingu]

Wrong. The entire premise is wrong. Students didn't create this problem, our b government did. To expand financial aide, they excluded student loans from bankruptcy. They permitted a vast increase in what could be considered student debt (rent, campus food stores, anything bought through the student store, health plans, etc.) Then they expanded to include revolving charge lines from card issuers with the student's solemn promise to only use it for education related costs.

This nearly unlimited credit also spawned one of the quickest growths in tuition costs, fueled a vast growth in campus building, and caused a massive increase in staff expenses.

For tuition costs, the answer is relatively simple. Include student loans once again under bankruptcy. Tuitions will quickly plummet after some years of whining and protests.

Blaming students for falling into a government funded and caused trap is simply blaming the victim. Sure, a bunch of companies will lose some money, we'll take 650 billion in losses to the national treasury, but it is merely a drop in the bucket compared to the alternative of debt forgiveness, creating yet another crop of people burdened with high debt.

[shalom aleichem]

Yes, another big blame is exploding costs at universities, as Rush points out often and for a long time.

The government taking over the student loan scam was a green light for colleges to make the sky the limit.

Then Liz Warren charges $400K to teach one course!

[EEGator]

“Then Liz Warren charges $400K to teach one course!”

Seems reasonable...

[HotHunt]

".... There’s plenty of guilt to go around...."

When Obama took the student loan business away from the private sector banks and brought it into government control, universities started raising their tuitions.

Tuitions went up in direct relationship to the government financing the student's debt. When the colleges know they'd be paid whatever they charged because the government was involved in the loan business, things got out of control pretty fast.

So now easy to get student loans to pay for inflated tuitions turns into a nightmare. Students can't find employment that will come close to generating enough income to pay the loans down.

Along comes fake Indian woman, Warren who says she'll pay the $640 billion student loan debt off by taxing the uber wealthy.

Sounds like another democRATic scam to me to rob the taxpayers.

Time for students to learn economics and take responsibility in paying their own debt back.

[HotHunt]

".... There’s plenty of guilt to go around...."

When Obama took the student loan business away from the private sector banks and brought it into government control, universities started raising their tuitions.

Tuitions went up in direct relationship to the government financing the student's debt. When the colleges know they'd be paid whatever they charged because the government was involved in the loan business, things got out of control pretty fast.

So now easy to get student loans to pay for inflated tuitions turns into a nightmare. Students can't find employment that will come close to generating enough income to pay the loans down.

Along comes fake Indian woman, Warren who says she'll pay the $640 billion student loan debt off by taxing the uber wealthy.

Sounds like another democRATic scam to me to rob the taxpayers.

Time for students to learn economics and take responsibility in paying their own debt back.

[M-cubed]

My sister in law was a classics major at S Cal and is now into her 25th year at Harvard Law School<<<

You married the wrong sister.....I get your drift...I did too!

But if it takes 25 yrs for her to get a law degree..she should face reality and look at a different profession......My SIL did and thank God!...She now employs 6-8 of our family at $85k to $220k...Hope you're doing as well!!..Gawd Bless ya!